A company with continuous losses in its main business, yet its stock price is soaring, even surpassing tech giant Nvidia! This sounds like a fantasy, but the 'Bitcoin proxy' MSTR—MicroStrategy has truly achieved it. Does it seem unbelievable? So, what charm does MSTR have that drives investors to pursue it so fervently?
MSTR's main business is software, but its performance has been mediocre in recent years, even posting losses for three consecutive quarters. However, this does not prevent it from becoming a star stock in the US stock market. It turns out that MSTR's side business—Bitcoin investment—is the real driver behind its skyrocketing stock price.
Since starting to invest in Bitcoin in August 2020, MSTR has accumulated approximately $18 billion worth of Bitcoin, becoming the world's most well-known 'Bitcoin proxy.' Its co-founder and chairman, Michael Saylor, has leveraged investment strategies to borrow at very low interest rates to purchase Bitcoin, enjoying substantial returns from Bitcoin's 50% compound growth rate over the past four years.
Although MSTR's financial report shows losses, investors seem unconcerned. They are more focused on the value of the Bitcoin held by MSTR and the company's determination to raise $42 billion over the next three years to continue purchasing Bitcoin. This unwavering faith in Bitcoin has led MSTR's stock price to soar, even surpassing tech giants like Nvidia.
However, analysts are divided regarding MSTR's surge. Some believe that the current stock price is excessively high compared to its asset value and expect it won't continue to rise; while others believe that next year's new accounting standards will value the Bitcoin held by the company at market price, potentially reversing MSTR's losses, making the stock still worthy of 'buying.'
So, can MSTR's stock price continue to soar? What is the secret behind it?
In fact, the surge of MSTR is not without reason. On one hand, Bitcoin, as the leader of digital currencies, is continually increasing in value and influence. With more and more institutions and investors beginning to accept and recognize Bitcoin, its price is expected to continue rising. As one of the largest holders of Bitcoin, MSTR's stock price will also benefit from this.
On the other hand, MSTR's leveraged investment strategy has also brought significant returns. By borrowing at extremely low interest rates to purchase Bitcoin, MSTR not only enjoys the benefits of Bitcoin's price increase but also reduces its own capital costs. This clever investment strategy has allowed MSTR to thrive in the Bitcoin market.
Of course, investing always comes with risks. MSTR's surge may also just be a temporary phenomenon. If Bitcoin's price drops significantly or regulatory policies change, MSTR's stock price may also be impacted. Therefore, investors need to keep a clear mind and rational judgment while chasing MSTR.
In summary, the surge of MSTR, the 'Bitcoin proxy,' is not a coincidence. It is supported by the value of Bitcoin and smart investment strategies. However, investors also need to be cautious about the risks and challenges involved. Let's wait and see if MSTR can continue to create more miracles in the future!
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The above content is for informational sharing only and does not constitute any investment advice! Investing involves risks; please be cautious when entering the market!
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